Haris Ashley
Life insurance companies use rating classifications to determine how much an individual will pay for coverage. These classifications are based on an applicant's health, lifestyle, and family medical history. The healthiest people with the safest lifestyles are placed in categories that qualify them for the lowest rates. The main rating classifications are Preferred Plus, Preferred, Standard Plus, and Standard, with some insurers also offering Tobacco/Smoker ratings. Only about 5% of people qualify for the best class, Preferred Plus. To be placed in this category, individuals must have a clean bill of health, no family history of cancer or heart disease, and not participate in risky activities. The second-best category, Preferred, is for people who are generally healthy but may have one or two health risk factors or a risky lifestyle factor. Standard Plus is for those who are healthy but have more health problems or a riskier family health history, while Standard is for individuals of average health who may have several medical issues or live a generally risky lifestyle.
| Characteristics | Values |
|---|---|
| Health | Very healthy, no serious health problems |
| Weight | Healthy weight for height |
| Smoking status | Non-smoker |
| Family health history | No serious health problems in the family |
| Driving record | Clean |
What You'll Learn
Height-to-weight ratio
When applying for life insurance, you will have to meet certain underwriting guidelines to qualify. Your height-to-weight ratio, or Body Mass Index (BMI), is a critical factor that life insurance companies use to assess whether or not you qualify for a policy and the price you will pay.
Each insurance company has its own height-to-weight ratio requirements, which are used to determine your rate class. These requirements are based on the risk they pose to the insurance company. The healthier you are, the less risky you are to the insurer, and the lower your premium will be.
For example, a person with a BMI of 18-29 will likely fall into the Preferred Plus classification, which has the lowest premiums. Applicants in this category will have a height-to-weight ratio within the Preferred-Plus range on the build table for that insurance company. People with a BMI of 30-31 will typically fall into the Preferred category, which has the second-lowest premiums. Applicants in this category will have a height-to-weight ratio within the company's Preferred range.
As your BMI increases, you will likely fall into the Standard Plus, Standard, and Substandard classifications, with premiums increasing at each level. People in these categories will have a height-to-weight ratio that falls within the company's respective ranges, which are typically higher than the Preferred range.
It is important to note that the height-to-weight ratio requirements differ between insurance companies, so it is recommended to shop around and compare rates from multiple providers to find the best policy for your needs.
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Family health history
When you apply for life insurance, you'll be asked to disclose whether a parent or sibling has been diagnosed with, treated for, or died from certain illnesses, including heart disease, cancer, diabetes, kidney disease, or other hereditary conditions. This is because people who have a family history of some health conditions may be at higher risk of developing those conditions themselves.
Life insurance companies use your family's medical history as an indicator of your future health risks when determining the cost of your premiums. However, your personal health profile and age are considered more significant factors.
If serious health conditions exist in your family's medical history, you'll still be able to get life insurance coverage, but you may have to pay higher premiums. The extra cost will depend on how many family members have suffered from a particular condition and how early in life they were diagnosed. If a diagnosis came after the age of 60 or 65, this may be less of a concern for insurers, and it may have no impact on your premiums.
Additionally, if the hereditary condition is gender-related, it will not be considered an issue for individuals who do not identify with that gender. For example, if there is a history of ovarian cancer in your family, but you are male, this will not affect your life insurance premium.
It's important to be honest about your family's medical history when applying for life insurance. Insurers will confirm your application against existing health records, and if they find out you lied or omitted information, they may increase your premium or even deny coverage altogether.
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Tobacco use
Life insurance companies evaluate all forms of tobacco use, not just cigarette smoking, when determining risk class and premium rates. This includes cigars, e-cigarettes, vaping products, chewing tobacco, and even smoking cessation products like nicotine gum and patches. Even occasional cigar or pipe smoking can result in being placed in the smoker category, depending on the insurer. Marijuana use may also be considered, depending on frequency and method of consumption.
To verify tobacco use, life insurance companies may require a medical exam, including blood, saliva, and urine tests, which can detect nicotine and its byproduct, cotinine. They may also request medical records, which could contain notes on tobacco use, or check prescription databases for smoking-cessation drugs.
While tobacco use can result in higher life insurance rates, there are ways to improve your risk classification. Quitting tobacco for at least a year is one of the most effective ways to lower your premiums, as most life insurance companies require you to be tobacco-free for at least 12 months to be considered a non-smoker. Maintaining a healthy lifestyle, getting regular health check-ups, and reducing high-risk activities can also help improve your risk classification.
In summary, tobacco use significantly impacts life insurance rates due to the associated health risks and increased mortality. Life insurance companies have various methods to verify tobacco use, and being placed in the smoker category can result in significantly higher premiums. However, taking steps to improve your health and quitting tobacco can help lower your risk classification and premiums over time.
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Driving record
A person's driving record is one of the most impactful records tied to their name. It can affect many aspects of their life, from their insurance rates to their right to vote.
When it comes to life insurance, a person's driving record is important in helping the insurance company assess their risk as an applicant. If their driving record shows regular speeding tickets, DUIs, or license suspensions, they will be deemed a high-risk applicant and can expect to pay much higher rates. In some cases, their application may be postponed or declined altogether.
- Number of moving violations: Each life insurance company has its own underwriting guidelines, but generally, an individual can still qualify for 'Preferred Best' rates if they have no more than 2 citations for moving violations in the last 3 years. If they have 3 citations in the last 3 years, they may qualify for 'Standard' rates, and if they have more than 3 moving violations, they will likely receive a substandard rating and be required to pay a flat extra for a certain period.
- DUIs: Most companies require that an individual has had no DUIs, OWIs, or reckless driving violations for at least 5 years to qualify for 'Preferred Best' rates. If a person has had one DUI in the last 3 years, they might be able to qualify for a 'Standard' or 'Standard Plus' rating. Once an individual has had multiple DUIs, it becomes more challenging to obtain coverage. Most companies will decline coverage if an individual has had 2 or more DUIs in the past 5 years or postpone coverage for a specified period.
- Multiple driving violations: If a person has had multiple speeding tickets or DUIs, they can expect to pay a higher base rate for life insurance and will likely be given a substandard or table rating, which carries a higher premium.
- Impact on base premium: The life insurance company may impose a flat extra on the base premium for a certain period. For example, if an individual has a DUI that is a year old, the insurance company may add a flat extra of $3.50 per thousand dollars of insurance to the base premium for 2 years.
- Applying with the right company: Each life insurance company has its own underwriting guidelines, so applying with the right company is crucial. Certain companies are more lenient than others when considering driving violations. If an individual has any violations on their driving record, they should research and compare different companies to find the one that will give them the best rating.
- Honesty and openness: It is important to be honest and upfront with the life insurance company about any driving violations. If information comes up later that was not disclosed, the insurance company can decline the application or deny a claim after coverage has started.
- Alternatives: Individuals with less-than-perfect driving records may consider alternatives such as no-exam insurance, which typically comes with higher rates and lower coverage amounts but can help secure financial protection if term or permanent life insurance is not an option.
- Patience and reapplication: If an individual doesn't get approved for life insurance initially, they should be patient and reapply after some time has passed, especially if they have maintained a clean driving record in the meantime.
In summary, a person's driving record is a significant factor in determining their life insurance rates and eligibility. A single speeding ticket may not affect their premiums, but a pattern of tickets or moving violations could cause issues. Dangerous driving behavior increases the chance of death, and life insurance companies want to assess an individual's risk accurately. Therefore, it is essential to maintain a safe and responsible driving record and be honest about any violations when applying for life insurance.
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Health conditions
Life insurance companies use health classifications to determine your premiums. These classifications are based on your health history and lifestyle choices.
Your health plays a large part in your life insurance classification. The insurance company will look at information from your medical exam (unless you qualify for accelerated underwriting), your answers to questions about previous or current medical conditions, and your prescription history. In some cases, the insurance company might also request an attending physician’s statement (APS) from your doctor to learn more about your health history.
Each life insurance company has its own build table that places you in a health classification based on height-to-weight ratios, similar to a BMI (Body Mass Index) measurement. Insurance companies also consider your weight history, so sudden or short-term weight changes may affect your rates, but will affect them more if the changes last a year or more.
Preferred Plus is the classification for the healthiest, lowest-risk applicants. To be placed in this category, you must have a clean bill of health, no family history of cancer or heart disease, and not regularly engage in risky activities.
The second-best category is Preferred. This classification is for those who are generally healthy but have one or two health risk factors, such as untreated high cholesterol or high blood pressure, or a risky lifestyle factor.
Standard Plus is for those with one or two medical issues but are still generally healthy.
The Standard classification is for those with several medical issues or who live a generally risky lifestyle. This is the most common classification.
In addition to these main categories, there are also tobacco/smoker ratings. Applicants who currently use tobacco or nicotine products or have in the past 12 months will receive a Tobacco or Smoker rating. These ratings are more expensive than their non-tobacco equivalents.
Other Factors
Aside from health conditions, there are other factors that affect your life insurance classification. These include:
- Age and gender
- Family medical history
- Lifestyle habits, such as risky activities, driving record, and occupation
- Credit history
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Frequently asked questions
The main life insurance categories are Preferred Plus, Preferred, Standard Plus, Standard, and Tobacco/Smoker. Some insurers also have a Substandard category for people with more health problems or a complicated family health history.
People in the Preferred category are generally healthy, but may have a slightly higher weight for their height, some health issues in their family, or a few small health problems. They are considered to be at low risk and are offered good prices for insurance.
A clean driving record is required to be considered for the best insurance rates. Multiple moving violations will lead to a lower life insurance risk classification and higher rates, while DWIs within the last five years will result in a declined application.
Yes, many insurers allow policyholders to request a re-evaluation of their rating classification after a certain period (usually 1-2 years) if they have experienced significant improvements in their health or lifestyle.
